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Al_Masetti
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Even so, there is no reason why Oprah’s compensation (or anyone else’s) should be capped.
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AJC
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Why $1,000,00?. We do not have a distributist system of economics in the US. Sounds socialistic therefore materialist to me. This is just a bad idea. If you do not like a company, do what I do, don’t buy there products or do business with them.
AJC
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manualman
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Thanks for being exhibit A in my complaint! People don’t seem to want to bother to understand what socialism or communism really is. Therefore, they don’t recognize smear campaigns that seek to perpetuate the myth that socialism vs capitalism are the only two alternatives. It’s essentially a straw man argument to avoid having people wonder if there aren’t adjustments than can be made to a free market system that retain the best features and eliminate abuses and/or structural injustices.
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vern_humphrey
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If we understand what capitalism is – the private ownership of the means of production and distribution, operated for profit in a competitive environment – then we understand that all the problems and abuses charged against capitalism are really** anti**-capitalist. Things like price-fixing, monopolies, limiting people’s right to shop for health insurance and so on are counter to the requirement for a competitive environment.
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Maxply
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Vern, I know from past threads that you’re a major economic writer!
I agree with what you say here about anti-capitalist stuff (that’s why it’s good to see white collar crime prosecuted: helps keep the system clean).
But two things:
(1) what about inheritances and windfalls? In a truly competitive system, what’s the rationale for one economic agent to give to another? Shouldn’t such transfers be banned, as providing an anti-competitive boost (this is the rationale for trying to reduce the rentier class in Europe: there are better uses of such capital than what trust fund kids typically do, which is ultra-secure investment).
(2) Are there not some positions which self-define their value? Perhaps by more and more narrowly classifying expertise. . . so that only one or two people have the requisite “value”.
(3) Is there such a thing as EXCESSIVE meritocracy? Here I think about Supreme Court nominees. . . there are probably a couple of dozen excellent and experienced lawyers in America. At a certain point, you’re looking at total equivalents and any of these guys will do a top-rate job. How do you then choose? Is this rational?
Just some pondering points for me that I’d like to hear you chew over. Best of Christmas, etc.
I agree with what you say here about anti-capitalist stuff (that’s why it’s good to see white collar crime prosecuted: helps keep the system clean).But two things:
(1) what about inheritances and windfalls? In a truly competitive system, what’s the rationale for one economic agent to give to another? Shouldn’t such transfers be banned, as providing an anti-competitive boost (this is the rationale for trying to reduce the rentier class in Europe: there are better uses of such capital than what trust fund kids typically do, which is ultra-secure investment).
(2) Are there not some positions which self-define their value? Perhaps by more and more narrowly classifying expertise. . . so that only one or two people have the requisite “value”.
(3) Is there such a thing as EXCESSIVE meritocracy? Here I think about Supreme Court nominees. . . there are probably a couple of dozen excellent and experienced lawyers in America. At a certain point, you’re looking at total equivalents and any of these guys will do a top-rate job. How do you then choose? Is this rational?
Just some pondering points for me that I’d like to hear you chew over. Best of Christmas, etc.
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vern_humphrey
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I note you actually ask three things.Vern, I know from past threads that you’re a major economic writer!
But two things:
A windfall is an apple that falls to the ground. Inheritance is based on the idea one can do with his property as he pleases.
To understand why inheritance is important, look at the impact of the Death Tax. It does not fall on the truly wealthy – because the wealthy and powerful make the laws and leave loopholes for themselves. It does fall on the family that has fought and struggled to improve themselves. The persons hardest hit by the Inheritance Tax are the families of the small entrepreneurs.
Let us remember also the American Dream – our children will have it better than we did. How is it the responsibility of the government to kill that dream?
Sure, but how is that relevant? A thing (including one’s labor) is what a willing seller will accept and a willing buyer will offer.
Some people have rare and valuable skills – surgeons, engineers and so on. And those who wish to buy those skills pay accordingly.
If the skills are “over-valued” – that is, grossly out of line with the cost of acquiring the skills – the more people will enter the market. If it costs a million dollars to become a brain surgeon, and brain surgeons make ten million dollars a year, there will soon be lots of people in medical school studying to be brain surgeons. In a while, there will be plenty of brain surgeons for hospitals and patients to choose from, and the cost of their services will be reducede accordingly.
I don’t think there is such a thing as an “excellent” lawyer from a moral standpoint.
However, remember that Supreme Court Justices are not part of the capitalist system – they are hired and paid by the government. If they were free-market workers, and there were so many qualified applicants for such a small number of jobs, the wages would be **much **lower than they are.
And a Merry and Holy Christmas to you, too.Just some pondering points for me that I’d like to hear you chew over. Best of Christmas, etc.
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anthony022071
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I’m not in favor of capping people’s salaries anyway,unless perhaps in the case of politicians,or people in who work in institutions where salary increases would be wasteful to the institutions themselves.
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manualman
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You misunderstand. I didn’t complain that he was defending capitalism. I complained that he characterized my ideas as “socialist” merely because they have certain anti-capitalist elements. That dog don’t hunt. Socialism is primary defined as the state OWNING the means of production to a more or lesser extent. Nothing I have suggested for discussion remotely revolves around state ownership of the means of production. Thus, my straw man complaint. Calling me wrong is fair argument. Mischaracterizing my position isn’t.
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Al_Masetti
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Who will decide?
What sort of bureaucracy will be established to approve private sector compensation?
Who and what criteria would decide (from an outside perspective) what is “wasteful to the institutions themselves”?
What makes an outsider qualified to decide on what goes on inside?
How many hundreds of hours of hearings would be required?
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vern_humphrey
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My point is, capitalism is an economic system with three characteristics:
- Private owership of the means of production and distribution.
- Operated for profit
- In a competitive environment.
I suspect you don’t oppose any of them – so when you say your ideas “have certain anti-capitalist elements” you mischaracterize your own position. Try explaining it a little more clearly. It might help if you held the definition of capitalism firmly in mind as you do so.
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consumedconvert
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Would that make the tax system any more complicated than it is now?
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manualman
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Those three elements are what make up a ‘free enterprise’ system. Personally, I think ‘capitalism’ goes beyond those and includes elements such as philosophical opposition to most forms of government regulation of business operation and the opinion that a corporation should be considered in law to have the same legal rights as a person. Not coincidentally, those are the parts of ‘capitalism’ that I think contain serious seeds of injustice.
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vern_humphrey
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No – capitalism is as I defined it.
The other things are tacked on by people who either don’t understand what capitalism is, or who have a specific agenda in mind.
For example, many people will cite monopolies as an evil of “capitalism.” Monopolies are anti-capitalistic, because they destroy the third element of capitalism, competition.
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anthony022071
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I don’t necessarily mean a decision from outside the institution,but from within the institution. If,for example,the head of a charitable organization is getting paid so highly that it is proving to be a burden on the budget,then the board of directors,or a committee,should put a cap on what the head of the organization can get paid. For some organizations,ones which are not primarily in the business of making money,high salaries can become a wasteful expenditure.
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vern_humphrey
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And what happens if he resigns as a result, and they can’f find a man of his caliber willing to work for the salary they set?
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anthony022071
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If the organization’s budget is under strain despite his high caliber and talents,then his salary probably isn’t justified.
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whatevergirl
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People’s credentials come with a price. The main thing any CEO has to concern him/herself with is making the stock price go up…It is not an easy thing to do. Where I work, supposedly in viewing some blogs on yahoo finance recently, I discovered that shortly before I started working there, back in 2002, the CEO promised the stock to be at $90 per share in 2007. Hmmm…we are only about …let’s see…$45 shy. 
I have bought into the stock plan, and it loses almost every quarter. So, in moving that stock price…he has to make sure he not only hires the right people to get on the bus, but he puts them in the right seats. And retaining talent is important, as we know too. The problem is that he hired a lot of expensive talent over the years, who have not brought in a sufficient ROI, again in reading these blogs.
Bottom line is that I think we can sit back and judge who is overpaid…but, every person’s credentials have an asking price. If someone pays it, then there must be a reason.
It would be awe inspiring however, to see a CEO of a top company, take a pay cut, in order to not lose employees who are working from paycheck to paycheck, like many. Does anyone know of any stories like that?
I have bought into the stock plan, and it loses almost every quarter. So, in moving that stock price…he has to make sure he not only hires the right people to get on the bus, but he puts them in the right seats. And retaining talent is important, as we know too. The problem is that he hired a lot of expensive talent over the years, who have not brought in a sufficient ROI, again in reading these blogs.Bottom line is that I think we can sit back and judge who is overpaid…but, every person’s credentials have an asking price. If someone pays it, then there must be a reason.
It would be awe inspiring however, to see a CEO of a top company, take a pay cut, in order to not lose employees who are working from paycheck to paycheck, like many. Does anyone know of any stories like that?
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vern_humphrey
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Or his caliber isn’t what he would have us believe it is.
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vern_humphrey
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Sam Walton.People’s credentials come with a price. The main thing any CEO has to concern him/herself with is making the stock price go up…It is not an easy thing to do. Where I work, supposedly in viewing some blogs on yahoo finance recently, I discovered that shortly before I started working there, back in 2002, the CEO promised the stock to be at $90 per share in 2007. Hmmm…we are only about …let’s see…$45 shy.
Bottom line is that I think we can sit back and judge who is overpaid…but, every person’s credentials have an asking price. If someone pays it, then there must be a reason.
It would be awe inspiring however, to see a CEO of a top company, take a pay cut, in order to not lose employees who are working from paycheck to paycheck, like many. Does anyone know of any stories like that?
He held his own salary at a fairly low level. Of course, as a major stockholder, he got rich on the dividends and soaring value of the stock. But he held his salary down.
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whatevergirl
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Ok–very nice! Thanks vern.
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